You've already heard it referred to thousands of times. When you turn on the news there's always that segment about the stock market that you just don't get. The Dow Jones Industrial Average did this or that today and you're not sure exactly what it means. Unless you've invested in it or you're involved in the world's financial markets chances are that you've heard it all but can't make much sense of any of it. You need a summary of Dow Stock Market today.
What Is The Dow?
The Dow Jones Industrial Average (DJIA) is one of the oldest ways of measuring the US Stock Market. One of its founders, Charles Dow created the index in 1896 as a means of keeping track of the prices of a dozen of the nation's top stocks. To calculate the value of the total index, he simply averaged it all by adding up the prices for all of the stocks and then dividing it by twelve.
How It Grew:
In order to understand a summary of Dow Stock Market today, you need to understand how it grew. The Dow actually became a primary gauge for the stock market not because it was the most effective way to gauge the fluctuations in prices but because it was one of the most visible tools to use. Because Charles Dow was also the founder of the famous financial paper, The Wall Street Journal, the index was published regularly. As a result people began to rely on it because it provided easy access to information they needed.
The Dow Today:
Today the Dow has grown to include thousands of indices that measure the market from every possible angle. It has been absorbed into the larger Standard & Poors Index that now manages all sorts of stocks being traded on the market.
While the majority of people will automatically think Dow when they want to discuss the current state of stocks, it doesn't have as much influence on market trends as it once had. With so many more indices to choose from there are many more ways to analyze the behavior of the market. Standard & Poor's 500 for example, follows 500 of the largest stocks in the nation. The Russell 3000 gives an even more detailed look at the trends in the market today with a compilation of 3,000 different companies covering all industries and sizes.
After more than 100 years of measuring the Stock Market, a summary of Dow Stock Market today will reveal that while it still has a place in the forefront of the stock market trade the Dow has taken a back seat to more progressive indices. Now there are thousands of ways to measure the market by size, sector, and even the fundamental practices of each industry. Even with all of that information out there, odds are that when people use the words "The Dow" they are likely thinking of the forerunner of all the other indices because it was the one that set the pattern that all the other indices follow.